San Jose Multifamily Market
2024 Investment Forecast
Employment Trends Fuel Housing Demand as
Ownership Challenges Aid Apartments
Luxury apartment demand surrounds the Googleplex. Continued employment growth among higher-wage industries, particularly the professional-technical and healthcare services sectors, is helping drive a local population recovery. San Jose’s resident count will come within 1.5 percent of its 2019 measure by year-end. Despite a still-smaller overall populace, apartment demand continues to expand this year, with local occupied stock exceeding its pre-pandemic count by nearly 9 percent. This dynamic is associated with the metro’s nationally high single-family home prices. Late last year, the difference between a mortgage payment on a median-priced home in San Jose and its mean effective Class A rent eclipsed $8,700 per month, leapfrogging San Francisco as the widest spread in the country. This is poised to place more households into the renter pool, resulting in net absorption reaching a three-year high in 2024. A substantial lift to deliveries this year, however, is set to maintain San Jose’s upward vacancy momentum. This dynamic is less apparent near Mountain View. A slowed pace of multifamily construction here accompanies Google’s announced pause to the development of a new Downtown San Jose campus. This will direct future recruiting classes to rent near the tech giant’s existing Googleplex, bolstering luxury apartment demand in Mountain View, Palo Alto and Los Altos. Capping off 2023, local Class A vacancy fell 100 basis points below its trailing decade-long average, a position it should retain this year.